Finance minister fails to win over tax officers on FBR revamp

• There is a wish to increase the tax-to-GDP ratio.
• Shamshad hints summary to be forwarded to the cabinet.
• FBR chief says no information is leaked to the media.

ISLAMABAD: In a desperate final attempt, Caretaker Minister for Finance Dr Shamshad Akhtar Friday visited the Federal Board of Revenue’s headquarters to win over the officers of Inland Revenue Service (IRS) and Customs group on a restructuring plan but the efforts turned out to be abortive.

During her hours-long visit to the FBR headquarters, only the authors of the revamp plan agreed to its implementation, while Akhtar could not make the rest of the officers of the IRS and Customs group accede to her plan.

There was no answer to how the proposed plan would help jack up tax-to-GDP ratio. Although, there is a wish to increase the tax-to-GDP ratio, no one knows how to do it.

The minister reportedly blamed the media for launching a campaign against the restructuring plan and stated that the concerns of the officers would be handled at the implementation stage. She hinted that the summary would be forwarded to get approval from the cabinet.

The sources said the FBR chairman explained his position and took the stance that no information was leaked from the FBR. He said the media obtained information from the minutes of the SIFC meeting and then criticised it when everything became available in the public domain.

The meeting, which was attended by the FBR members, chief commissioners, Customs collectors and all other relevant heads of the FBR, continued for hours on Friday. Only the Friday prayer was allowed but the hours-long meeting remained unable to evolve consensus over the restructuring plan.

Caretaker Finance Minister Dr Shamshad Akhtar illustrated in her proposed plan that a new governance structure for the FBR would be established through separate Federal Board of Customs and Federal Board of Inland Revenue and appointment of DGs from respective cadres as their heads.

The separate Oversight Boards for Customs and Inland Revenue Administrations are to be chaired by independent high-calibre professionals and members of the board will include public and private sector representation nominated through proper criteria and right expertise and integrity.

The focus of the reforms will be on strengthening governance with accountability through oversight boards. The reconstitution of the Federal Policy Board under the finance minister with the secretary Revenue Division will report to the Federal Policy Board with a new policy mandate. The Tax Policy Office will be constituted with HR having the right expertise, including taxation and industry professionals under the Federal Policy Board, which will look after the harmonisation of assets valuation modalities and legal and regulatory framework of taxation regimes and promote revenue and policy coordination. The proposed reforms will be implemented within the existing allocation of resources of the FBR. The SBP governor advised that the audit function of FBC and FBIR would be placed under the Tax Policy Unit (TPU) for ensuring independence.